True. If you set the "can build" flags appropriately to match with the upgrade paths then flavor units aren't a problem.
However, I think it would be a very nice addition indeed if you could make upward branches in the upgrade path, i.e. its structure would be a true net instead of a tree. If your techs then allowed upgrading a unit type to multiple units you'd just get a popup with the available choices.
Let me give a modding example:
Imagine you have a unit called frigate with stats 1.1.1. Once you discover ion drive you can build patrol ships with stats 1.1.2. Now, it's conceivable that you could install your new ion drives on the existing frigates so we make them upgrade to patrol ships. Afterall by the stats the patrol ship is just a faster version of the frigate.
OTOH instead of researching the ion drive you could choose to go for the pulse cannon. This tech allows you to build strikers with stats 2.1.1. Again it would be nice if you could refit pulse cannons on your existing frigates upgrading them into strikers.
Thus the frigate could be upgraded to two different units depending on which branch the player chose to research.
And to make this really awesome you ought to be able to set for an unit to require not only one tech as a prerequisite but two! Then you could have a unit called cruiser with stats 2.1.2 requiring _both_ the ion drive and the pulse cannon techs. Also both the patrol ship and the striker would upgrade to cruiser.
Summary:
1) You research first ion drive then pulse cannon. Upgrade path is: frigate - patrol ship - cruiser.
2) You research first pulse cannon then ion drive. Upgrade path is: frigate - striker - cruiser